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Jakarta Post

Price caps for coal-fired power plants to boost competitiveness

  • Fedina S. Sundaryani

    The Jakarta Post

Jakarta   /   Fri, March 3, 2017   /  11:01 am
Price caps for coal-fired power plants to boost competitiveness This picture shows the Bukit Asam coal-fired power plant in Muara Enim, South Sumatra, on Nov. 3, 2016. (Antara/ Zabur Karuru)

The government hopes that tariff caps for electricity produced by mine-mouth and regular coal-fired power plants will help increase Indonesia's competitiveness.

The price caps, introduced through ministerial decree No. 19/2017, would keep electricity tariffs low and encourage growth in the industrial sector said Jarman, the Energy and Mineral Resources Ministry's Director General for Electricity on Friday.

"One of the challenges we face now is competitiveness with our neighboring countries, and this competitiveness must also include fair electricity prices," he said during an event to raise awareness of the new ministerial decree.

(Read also: Mine-mouth power plant regulation to be issued soon)

"We must ensure that our electricity is not more expensive than that in Thailand and Malaysia. However, we cannot compare [our prices] with Vietnam's as their electricity is subsidized."

In the case of mine-mouth power plants, the decree dictates that if the cost to supply electricity (BPP) in a region is higher than the national average, the electricity tariff should be capped at 75 percent of average national rates.

If the BPP in a re­gion is lower or equal to the national average, then the electricity tariffs should be capped at 75 percent of the region's average.

Meanwhile, the same ministerial decree dictates that for regular coal-fired power plants with capacity under 100 megawatts (MW), if the BPP is lower than the national average, tariffs must not exceed the local BPP.

Meanwhile, if the BPP is higher than the national average, electricity tariffs must not be higher than the national BPP. (bbn)

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